The Emergency Fund

Gaining Financial Peace blog

It was 2:20 in the morning, and I awoke to a hissing sound. I went to investigate and found 300 gallons of water had leaked from a failed connection under the sink in the kitchen. Water had saturated everything in the kitchen and the basement of our home. We had insurance but our portion of the repair was over $30,000. We did not have an adequate emergency fund so the most of this repair was incorporated into a refinance of our mortgage, which was a major set back to getting our mortgage paid off.

For generations our grandparents have been teaching us that we need a rainy day fund. Why? Because it is going to rain! Proverbs 21:20 says, “ In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” The American culture has forgotten this Biblical principle. Let’s dig a little deeper to understand the principle of saving.

The discipline of saving needs to be a priority in the life of the believer. In Financial Peace University (FPU), we teach that the budget much include first giving, saving, and then paying bills. If you don’t prioritize saving before you pay bills, there will never be money left over to save. We already studied giving and generosity in the February ARC Magazine article, so let’s explore the concept of saving.

The Spiritual Role of Money?

Saving money reflects our attitude and contentment.

I Timothy 6:10 says that, “the love of money is a root of all kinds of evil”. It does not say that money itself is evil. It indicates the importance of our attitude towards money.

Money is a tool. It is amoral, neither good nor evil. Many Christians misunderstand this verse and conclude that making and saving money is morally wrong. It is difficult to prosper financially if you think making money is wrong. Having the wrong view of money will short circuit the whole process of saving.

Genesis says it is the believer’s spiritual obligation to have dominion over money (Adam and Eve towards creation) and have a healthy attitude towards generosity, money and possessions (Abel vs Cain). If we don’t, we surrender God’s resources to the enemy.

Having an emergency fund is the first step towards taking control of money in our lives.

Getting Started

In FPU, we suggest a starter emergency fund of $1000 and want you to get this in place within a month. You can work overtime, sell things on CriagsList or have a garage sale, to generate cash.

The Fully Funded Emergency Fund

The $1000 is a good start and keeps small everyday emergencies from driving us to borrowing. The fully funded emergency fund is the next step. It consists of 3-6 months of your expenses in savings, which provides a buffer against larger emergencies like losing a job, large medical bills, or water in your basement. The average family’s emergency fund should be approximately $20,000 – $30,000. If the Petersen’s had this level of emergency fund in place we would not have needed to borrow for our water leak emergency I described at the beginning of the article.

Your emergency fund is not an investment. It should be viewed as insurance. A great place to keep your emergency fund is in a money market account with check writing privileges.

The emergency fund is for true emergencies that cannot be anticipated, like a flooded basement. It is not a new truck fund or a new couch fund. The emergency fund shouldn’t be used for vehicle replacement or repairs (see April ARC Magazine article “How to Pay Cash for Cars”). You should be saving regularly for those. If the emergency fund is used, the funds should be replaced as quickly as possible

Many people who establish their emergency fund, report a sense of peace when the unexpected arises. Previously, they experienced both a financial and emotional crisis. Now Murphy (whatever can go wrong will go wrong) seems to go down the street to pick on someone without a emergency fund.

Emergency Funds for Students

Building an emergency fund is a good discipline to learn at any age. We recommend a $500 emergency fund for high school and college students to cover things like an unexpected car repairs or damage to a computer.


Brian and Lisa Petersen lead the Financial Peace University course at Autumn Ridge Church. Concepts like the one discussed in this article are taught in FPU. Brian and Lisa welcome your questions on building your “Emergency Fund”. They can be reached at

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